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Agenda Item
ASR
Control 18-001031 |
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MEETING DATE: |
10/16/18 |
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legal entity taking action: |
Board of Supervisors |
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board of supervisors
district(s): |
3 |
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SUBMITTING
Agency/Department: |
County Executive Office (Approved) |
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Department contact
person(s): |
Suzanne Luster (714) 834-3362 |
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Susie Ortiz (714) 834-3662 |
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Subject: Public Hearing for Proposed
Tax Exempt Revenue Obligations
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ceo CONCUR |
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Clerk of the Board |
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Concur |
Approved Resolution to Form |
Public Hearing |
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3 Votes Board Majority |
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Budgeted: N/A |
Current Year Cost:
N/A |
Annual Cost:
N/A |
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Staffing Impact: |
No |
# of Positions:
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Sole Source:
N/A |
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Current Fiscal Year Revenue: N/A
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Prior Board Action: 9/25/2018
#41 |
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RECOMMENDED ACTION(S):
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1. |
Open the public hearing and receive public comments pursuant to Section 147 (f) of the Internal Revenue Code of 1986, as amended, regarding the proposed issuance of California Enterprise Development Authority Revenue Obligations, not to exceed $43,000,000, for the benefit of Lutheran High South – Orange County, Inc., d/b/a Crean Lutheran High School, a California nonprofit religious corporation. |
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2. |
Close the public hearing. |
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3. |
Adopt a Resolution approving the issuance of California Enterprise Development Authority Revenue Obligations, not to exceed $43,000,000, for the benefit of Lutheran High South – Orange County, Inc., d/b/a Crean Lutheran High School, a California nonprofit religious corporation. |
SUMMARY:
Approval of the recommended actions will provide a mechanism for the School to refund existing debt for more favorable terms and exercise an athletic field purchase option.
BACKGROUND INFORMATION:
Crean Lutheran High School
Lutheran High South – Orange County, Inc., d/b/a Crean Lutheran High School (School) was established in 2004 with a $350,000 start-up grant from John and Donna Crean. In 2007, the John and Donna Crean foundation provided a $10 million gift to build a new school facility. The 2007-08 school year was the inaugural academic year and in the same year, the School received a full, three-year Western Association of Schools and Colleges Accreditation. In 2010 the School purchased 17 acres of land on Sand Canyon Avenue in Irvine. Subsequently, the School secured an option on a nearby 11-acre parcel of land and later became athletic fields, which led to the development of needed track, field and practice ball fields.
In October 2016, the City of Irvine Planning Commission approved the School’s North Campus Expansion Project, which would add 25,000 square feet of academic, performing arts, strength and conditioning space, and synthetic turf and light for the stadium.
The City of Irvine provided a letter, acknowledging support for the project and public hearing, included here as Attachment B.
Description of Financing
The proposed tax exempt revenue obligations will be issued with the School, California Enterprise Development Authority (Authority), and First Republic Bank entering into a three-party loan agreement pursuant to which the Bank makes a loan to the Authority which in turn makes a loan to the School. The proceeds will refinance existing tax exempt debt, plus allow the School to exercise the purchase option on the School athletic fields. Approximately $40 million will refinance the previous debt to more favorable terms for the School and approximately $3 million to exercise the field purchase option and pay administrative expenses of the transaction.
The revenue obligations will be issued in tranches, with expected interest rates ranging from 2.55% to 3.05% and terms of five, 10, and 15 years.
The County will not be the issuer and will not be a
party to the financing agreement. The
County will have no financial obligation or liability for payment. The financing will be secured by real and
personal property of the School.
California Enterprise Development Authority
The Authority is a joint exercise of powers authority sponsored by the California Association for Local Economic Development and established pursuant to a Joint Exercise of Powers Agreement, dated as of June 1, 2006 (the “JPA Agreement”), among the cities of Selma, Lancaster, and Eureka. There are approximately 200 cities and counties who are associate members of the Authority, including 12 Orange County cities and our neighboring counties of San Diego, Riverside, San Bernardino, and Ventura. The County became an Associate Member of the Authority on September 25, 2018.
Federal tax law requires a Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) Resolution, adopted after conducting a public hearing, as a condition of tax exempt eligibility. The School and the Authority have requested that the County conduct the public hearing and provide the TEFRA Resolution.
Conclusion
Approval of the recommended actions will authorize the issuance of revenue obligations only for the purpose of satisfying the requirement of Section 147 (f) of the Internal Revenue Code.
FINANCIAL IMPACT:
There is no financial impact or liability to the County of Orange.
STAFFING IMPACT:
N/A
ATTACHMENT(S):
Attachment A - Resolution-Approving Revenue Obligations
Attachment B - Acknowledgement Letter - City of Irvine
Attachment C - Internal Revenue Code Section 147